[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.amorusolaw.com\/blog\/tapping-an-inherited-ira-new-york-ny-white-plains-ny\/#BlogPosting","mainEntityOfPage":"https:\/\/www.amorusolaw.com\/blog\/tapping-an-inherited-ira-new-york-ny-white-plains-ny\/","headline":"Tapping an Inherited IRA?","name":"Tapping an Inherited IRA?","description":"\u201cWhen a loved one dies, any leftover IRA funds they had goes to whomever they labeled as beneficiaries. If you’re a beneficiary, you have to decide how you’re going to use it\u2014a decision that’s a little more complicated this year than it normally is.\u201d Many people are looking at their inherited IRAs this year, when […]","datePublished":"2020-06-18","dateModified":"2024-08-07","author":{"@type":"Person","@id":"https:\/\/www.amorusolaw.com\/blog\/author\/amorusolaw\/#Person","name":"Amoruso & Amoruso LLP","url":"https:\/\/www.amorusolaw.com\/blog\/author\/amorusolaw\/","identifier":5,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/12de032c04195e9c39a06a6d6eea182f7b4fa655c20e245f8094a244b5cdd0cb?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/12de032c04195e9c39a06a6d6eea182f7b4fa655c20e245f8094a244b5cdd0cb?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Amoruso & Amoruso LLP","logo":{"@type":"ImageObject","@id":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/07\/amoruso-logo.svg","url":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/07\/amoruso-logo.svg","width":0,"height":0}},"image":{"@type":"ImageObject","@id":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/04\/6a01901dd0a082970b0263ec2200bc.jpg","url":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/04\/6a01901dd0a082970b0263ec2200bc.jpg","height":600,"width":900},"url":"https:\/\/www.amorusolaw.com\/blog\/tapping-an-inherited-ira-new-york-ny-white-plains-ny\/","about":["Estate Planning","Required Minimum Distributions \/ RMDs","Roth IRA \/ Roth Conversions","Surviving Spouse"],"wordCount":548,"keywords":["Estate Planning","Required Minimum Distribution","RMDs","Roth IRA","Surviving Spouse"],"articleBody":"\u201cWhen a loved one dies, any leftover IRA funds they had goes to whomever they labeled as beneficiaries. If you’re a beneficiary, you have to decide how you’re going to use it\u2014a decision that’s a little more complicated this year than it normally is.\u201dMany people are looking at their inherited IRAs this year, when COVID-19 has decimated the economy. The rules about when and how you can tap the money you inherited changed with the passage of the SECURE Act at the end of December 2019. It then changed again with the passage of the CARES Act in late March in response to the financial impact of the pandemic.Things are different now, reports the article “Read This Before You Touch Your Inherited IRA Funds” from the News & Record, but one thing is the same: you need to know the rules.First, if the owner had the account for fewer than five years, you may need to pay taxes on traditional IRA distributions and on Roth IRA earnings. For the year 2020, the federal government has waived mandatory distributions (required minimum distributions, or RMDs). You may take out money if you wish, but you can also leave it in the account for a year.Surviving spouses who don\u2019t need the money may consider doing a spousal transfer, rolling the spouse\u2019s IRA funds into their own. The RMD doesn\u2019t have to begin being paid out until age 72. This is only available for surviving spouses, and only if the spouse is the decedent\u2019s sole beneficiary.The federal government has also waived the 10% early withdrawal penalty for taxpayers who are under 59\u00bd. If you are over 59\u00bd, then you can access your funds.The five-year method of taking IRA funds from an inherited IRA is available to beneficiaries if the owner died in 2019 or earlier. You can take as much as you wish, but by December 31 of the fifth year following the owner\u2019s death, the entire account must be depleted. The ten-year method is similar, but only applies if the IRA\u2019s owner died in 2020 or later. By December 31 of the tenth year following the owner\u2019s death, the entire IRA must be depleted.Heirs can take the entire amount in a lump sum immediately, but that may move their income into a higher tax bracket and could increase tax liability dramatically.A big change to inherited IRAs has to do with the \u201clife expectancy\u201d method, which is now only available to the surviving spouse, minor children, disabled or chronically ill people and anyone not more than ten years younger than the deceased. Minor children may use the life expectancy method until they turn 18, and then they have ten years to withdraw all remaining funds.There is no right or wrong answer when it comes to taking distributions from inherited IRAs. However, it is best to do so only when you fully understand how taking the withdrawals will impact your taxes and your long-term financial picture. Speak with an estate planning attorney to learn how the inherited IRA fits in with your overall estate plan.Reference: News & Record (May 25, 2020) “Read This Before You Touch Your Inherited IRA Funds”For more information on asset preservation and estate planning, please visit my estate planning website."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Blog","item":"https:\/\/www.amorusolaw.com\/blog\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Tapping an Inherited IRA?","item":"https:\/\/www.amorusolaw.com\/blog\/tapping-an-inherited-ira-new-york-ny-white-plains-ny\/#breadcrumbitem"}]}]